Red Cell Partners has entered into a one-year agreement with the Department of War’s Chief Digital and Artificial Intelligence Office with a ceiling of up to $100 million to pilot a shared-savings contracting model for AI services and agentic workflows.
Under the model, Red Cell will cover the upfront cost of deployments and receive compensation based on a percentage of the verified savings generated. If the technology does not produce the agreed outcomes or cost savings, Red Cell receives no payment.
Red Cell said it spent nearly two years working with CDAO and the Navy to develop an approach for reducing government costs through greater efficiency and the use of agentic AI.
The agreement is structured as an Other Transaction Authority and is designed to give agencies across the department access to the shared-savings contracting structure for AI services. Pilot services will be delivered by companies in Red Cell’s portfolio.
Rather than paying vendors primarily for labor or activity, the model is structured around verified outcomes. Red Cell said the approach is intended to align vendor compensation with measurable mission results while allowing savings from existing contracts to be redirected toward other priorities.
The company pointed to shared-savings approaches already used elsewhere in the federal government, including models that it said have generated $19.3 billion in federal energy savings and returned $2.5 billion to Medicare in a single year.
